Secure 2.0 Act Simplifies Roth RMDs, Raises Age for Traditional Accounts
The Secure 2.0 Act of 2022 has brought significant changes to retirement plans. The required minimum distributions (RMDs) for Roth 401(k) and 403(b) plans are no longer mandatory, regardless of the account owner's age. However, traditional retirement accounts still have RMD rules starting at age 73.
Previously, RMDs began at age 72 for most retirees. But the Secure 2.0 Act has raised this age to 73 for those born between 1951 and 1959. This change aligns with the increase in life expectancy.
Traditional retirement accounts, such as IRAs and 401(k) plans, still require mandatory distributions once the account owner reaches 73. Even if still working, RMDs apply. Failure to withdraw the required amount by the deadline results in a 25% excise tax penalty, reduced to 10% if corrected within two years.
The Secure 2.0 Act has simplified RMD rules for Roth 401(k) and 403(b) plans, removing the age-related requirement. However, traditional retirement accounts remain subject to RMDs starting at age 73. It's crucial for retirees to understand these changes and comply with the rules to avoid penalties.
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